NAIROBI, Kenya, Jul 7 – Property prices are on the rise buoyed by a stabilising economy and more purchasing power among Kenyans, according to a real estate firm.
Jenny Luesby from HassConsult said on Wednesday that the purchasing power for the middle and upper income earners had stabilised in the last 18 months, thereby helping to push up the demand for property as well as their cost.
"The growth area in the housing market at present is in new home owners. The new range of mortgage offerings and finance partnerships has been instrumental in supporting the market through the (economic) downturn and in stimulating new and extended buying by professional Kenyans who were previously renting," said Ms Luesby.
She added that despite the economic slowdown that has been experienced in the country in the last two years, the Kenyan market has remained robust and it\’s now showing signs of a return to the growth path.
The company\’s Property Development Manager Farhana Hassanali said there was a continued shift towards mortgage-financed purchasing by people in the middle and upper income groups moving away from rented accommodation to home ownership.
She hailed Finance Minister Uhuru Kenyatta\’s recent move to raise the core capital that banks are allowed to invest in mortgage financing from 25 percent to 40 percent. Banks and mortgage lenders can therefore increase their lending capacity and thus lower interest rates on mortgages.
"Twenty five to 40 percent is a huge increase in available finance. It will further prompt the growth of the middle market now in terms of demands for housing," Ms Hassanali said.
At the same time, the property manager revealed that the rental rate has also increased by one percent in most places.
She said the gap between asking and selling prices for houses narrowed further in the second quarter, where asking prices dropped by 0.5 percent as selling prices rose by 0.4 percent.
The rise in selling prices suggests that the market is now unlikely to suffer a significant downturn in prices in the near future.